Many times youngsters, mostly fresh graduates coming out of MBA colleges who come to me for advice, dream of getting private equity jobs or venture capital jobs.
Their initial goal in life is to get a high paying job as a private equity analyst or a private equity associate with leading private equity firms.
But most of these youngsters don’t really know what a private equity firm does or what it takes to get a job with a private equity firm. They are drawn to these private equity jobs more for the money and glamour which is associated with this profile.
So I’d like to take a minute to explain what exactly private equity firms do and what a private equity job-description looks like.
Private equity firms obtain capital from HNIs (high net worth individuals) and use it to invest and acquire equity stakes in other companies.
Key players in private equity are institutional investors and qualified investors who are willing to commit big sums of money for long time periods.
The average duration for any private equity deal varies from 5 to 7 years. After this period the private equity generally sells out through an IPO (initial public offer) deal or through a stake sale to earn huge profits.
Leading private equity firms in the world include Goldman Sachs Capital Partners, KKR (Kohlberg Kravis Roberts), The Blackstone Group, Apollo Management and Bain Capital.Key Indian private equity firms include Baring Private Equity Partners (India), Chrys Capital, Cipher Securities India Pvt Ltd, ICICI Ventures and IDFC Private Equity.
So now that we understand exactly what a private equity firm does, let’s try to understand how private equity head-hunters define a private equity job description.
Crucial duties & responsibilities of a private equity analyst
· Monitoring current investments under management
· Finalizing quarterly and yearly reviews of funds and companies in portfolio
· Create & update valuation models and projection models for portfolio companies
· Assist in due diligence, review & study of potential new investments
· Conduct detailed research on target investments and create fundraising collateral
· Research, transcribe & present industry studies to detect possible areas of future investment
· Prepare detailed information memorandums
· Review legal documentation and deals
· Build portfolio analysis & performance metrics
· Interact with senior members of private equity firms to acquire intelligence on existing &potential investments
· Complete additional duties as requested or allotted
OK…Now, let’s look at what desired skills and experience, private equity firms expect from potential or prospective candidates.
Desired skills and experience
· Candidates who aim to latch on the these highly attractive private jobs, are expected to show solid work ethics, display multi-tasking abilities
· They should be able to work efficiently both as an individual and as part of a project team and work with least amount of supervision
· They must have robust general knowledge about various different industries, finance, accounting and other financial concepts
· They are expected to show tactical and original thinking abilities
· They should have outstanding communications skills (both written and verbal)
· These candidates should exhibit good academic aptitude, strong quantitative skills (which includes financial modeling skills and valuation skills)
· They should have a positive attitude and should readily accept responsibility and accountability for projects
· They are expected to be well versed in Microsoft Office suite
· They should be open to traveling in both domestic and international sectors on short official visits
Education and experience
Most private equity firms prefer candidates with strong academic background and at least one to two years of relevant experience.
MBA graduates from reputed business schools are definitely given preference.
Excellent communication skill (both written and verbal) is an absolute pre-requisite as a private equity job is a client facing job.
So now that I have mentioned the skills required for getting a private equity job in detail, let me just synopsize it for you so that you can prepare yourselves for these kinds of jobs:
Key skills required
Knowledge & experience
As I mentioned above it is imperative that you have adequate knowledge about the finance sector and the private equity industry. Relevant work experience is also of immense help as being a part of the finance industry will definitely increase your possibilities of getting a good private equity job.
Most reputed private equity firms prefer to hire aspirants who have experience of working with smaller private equity firms or financial institutes.
Ability to research and analyze
A major chunk of your time at a private equity firm will go in analyzing enormous chunks of financial data.
You will be expected to carry out various types of complex analysis on sheet and sheets of financial data.
Though most private equity firms have internal training programs, it’s always a good idea to hone up your financial analytical skills and strengthen your CV, before you apply for these jobs.
You could visit our previous article ‘4 ways to learn financial modeling in excel’ to understand ways in which you can increase your knowledge in financial analysis.
In addition it will also help to improve your research skills and increase your understanding of various sectors or industries.
Having explained what private equity firms expect from prospective candidates and how candidates should prepare themselves for these high profile high paying jobs, I’d like to make it amply clear that this job is not for the feeble minded.
It entails long grueling office hours, hours and hours in front of excel sheets, extensive travelling, negotiating with aggressive investment bankers and lots and lots of stress.
So for young graduates with no work experience, I would always advise you to first make sure you fit the bill for a private equity job. Decide if this is really what you want to do.
Do not run behind it because your friends are running behind it.
If you really want this job, then prepare yourself for it methodically.
Do not directly gun for the biggies in the industry. Instead, target smaller private equity firms where you can learn and grow quickly. Once you have the basics right then you can target the big firms.
Finally, I hope this article helped you in understanding the world of private equity and I would like to wish you all the best in your quest for that coveted private equity job.
Did I Forget Anything?
There you have it, a short guide on private equity jobs…covering education, duties, responsibilities, skills, and experience required.
I spent good time to create this post, researching the web for every little detail I could find.
Even so, I’m sure there are a few that I missed.
Or maybe there’s one on the list that you disagree with.
Either way, leave a comment below!
View All BIWS Courses –Free $97 Bonus for FinanceWalk Readers